Decomposing wealth inequality in Australia

Melek Cigdem-Bayram (), Miranda Stewart, Stephen Whelan and Gavin Wood
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Melek Cigdem-Bayram: Melbourne Institute: Applied Economic & Social Research, University of Melbourne, https://findanexpert.unimelb.edu.au/profile/1016384-melek-cigdem-bayram
Miranda Stewart: Faculty of Law, The University of Melbourne
Stephen Whelan: School of Economics, The University of Sydney
Gavin Wood: Centre for Urban Research, RMIT University

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: This paper examines dynamics in household wealth inequality in Australia spanning nearly two decades, from years 2002-2018. We use the Household, Income and Labour Dynamics in Australia (HILDA) survey to document trends in household wealth and employ a decomposition analysis to estimate the contributions of socio-economic and demographic factors to changes in inequality. Our analysis shows that while overall inequality in net wealth remained largely unchanged, these masks contrasting trends across the wealth distribution and between property and financial assets. We detect evidence of a ‘disappearing middle,’ with the wealth position of middle-income households deteriorating relative to both the rich and poor. The decomposition analysis highlights the degree to which declining homeownership rates exacerbate wealth inequality, and the countervailing influences of population aging and rising human capital. These findings illustrate how societal changes over two decades, in particular Australia’s worsening housing affordability challenges, are reshaping wealth inequality in Australia.

Keywords: wealth inequality; decomposition; DFL technique; homeownership (search for similar items in EconPapers)
JEL-codes: D31 G51 J11 O16 O18 (search for similar items in EconPapers)
Pages: 29pp
Date: 2024-12
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